Who first called Apple at $500?

Technically, it was Hudson Square's Daniel Ernst. But we have a few caveats.

Ernst on CNBC

Eyebrows were raised in October 2010 when Daniel Ernst hiked his 12-month Apple (AAPL) price target from $300 a share to $500. But perhaps drawing attention to himself was the point. The senior analyst at Hudson Square Research is now a regular contributor on CNBC and his current price target -- $700 -- is once again the Street's highest.

With Apple passing the $500 mark in early trading Monday, you might think Ernst had earned bragging rights for making the first $500 per share call.

But a look at his track record on Apple suggests otherwise. Not only did his Oct. 2010 price target bear no relation to the numbers in his spreadsheet, but of all the analysts who follow the company, his published estimates have proved to be among the worst. Over the past five quarters, his average error on earnings and revenues are second only to Morgan Stanley's Katy Huberty for the magnitude of their misses. Four days after his famous $500 call, he finished last in our quarterly Earnings Smackdown and got singled out in the write-up:

"We're not sure what to say about Hudson Square's Daniel Ernst, who took first place in gross margin by a rounding error but came in dead last in revenue and EPS and missed the iPhone number by 4.6 million units."

Finally, we should point out that Apple didn't actually reach $500 within the 12 months of Ernst's price target. (On Oct. 14, 2011 shares closed just over $422.)

According to Terry Gregory, who tracks such things at AAPLInvestors.net, credit for the best 12-month calls might be shared by Piper Jaffray's Gene Munster and Ticonderoga's Brian White, who on Jan. 19, 2011, set price targets of $484 and $550, respectively.

Or, depending on when Apple actually hits $500 per share, credit might belong to Evercore's Robert Cihra, who set his 12-month $500 target on April 21, 2011.

For the record, Bullish Cross's Andy Zaky, a blogger who is not part of the Wall Street establishment, wrote an item for Fortune.com two days before Cihra's note in which Zaky predicted Apple would soon be trading above $500, although he thought it would happen before the end of 2011. See Why Apple's shares are dirt cheap.

Approaching Apple from another angle, Asymco's Horace Dediu noted last May that while the share price seems to bear no relation to earnings growth, it has for the past three and a half years been highly correlated to the company's holdings in cash and marketable securities. In September he posted a chart that showed Apple hitting $500 when cash per share reached $100. On Friday he posted a follow-up. "With current cash per share reaching $95 to $100," he wrote, "it seems that the share price should be around $500 any time now."

Dediu's chart:

Source: Asymco.com

Posted in: Analysts, Andy Zaky, Apple, Asymco, Daniel Ernst, Earnings Smackdown, Horace Dediu, Hudson Square, iPhone, Morgan Stanley, Piper Jaffray, Quarterly earnings, Robert Cihra

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